August 2017 ADP Job Growth Is 237,000 - Well Above Expectations

ADP reported non-farm private jobs growth at 237,000. Last month’s employment growth was significantly revised upward.

Analyst Opinion of ADP Employment Situation

This month the rate of ADPs private employment year-over-year growth remained in the tight range seen over the last year.

ADP employment has not been a good predictor of BLS non-farm private job growth.

The market expected from Bloomberg / Econoday 145,000 to 200,000 (consensus 182,000) versus the 237,000 reported. These numbers are all seasonally adjusted;

In Econintersect‘s August 2017 economic forecast released in late June, we estimated non-farm private payroll growth at 150,000 (based on economic potential) and 195,000 (fudged based on current overrun of economic potential).

This month, ADP’s analysis is that small and medium sized business created 51 % of all jobs [very small percentage].

Manufacturing jobs grew 16,000.

86 % of the jobs growth came from the service sector. [another unusually small percentage]

The July ADP report (last month), which reported job gains of 178,000 was revised to 201,000.

The three month rolling average of year-over-year job growth rate is 1.99 % (insignificantly different than last month’s 2.00%)

ADP changed their methodology starting with their October 2012 report, and ADP’s real time estimates are currently worse than the BLS.

Per Mark Zandi, chief economist of Moody’s Analytics:

The job market continues to power forward. Job creation is strong across nearly all industries, company sizes. Mounting labor shortages are set to get much worse. The initial BLS employment estimate is often very weak in August due to measurement problems, and is subsequently revised higher. The ADP number is not impacted by those problems.

Per Ahu Yildirmaz, VP and head of the ADP Research Institute.

In August, the goods-producing sector saw the best performance in months with solid increases in both construction and manufacturing. Additionally, the trade industry pulled ahead to lead job gains across all industries, adding the most jobs it has seen since the end of 2016. This could be an industry to watch as consumer spending and wage growth improves.

Jobs growth of 150,000 or more is calculated by Econintersect to the minimum jobs growth to support population growth (see caveats below). The graph below shows ADP employment gains by month.